Markets Cautiously Optimistic On Positive US

General Trend:

• Markets cautiously optimistic on news that US trade negotiators could visit China next week for their first face to face meeting since the G20. Trump agreed to making a decision on Huawei
• NZ$/USD fell 0.3% after RBNZ said that they were looking at unconventional policy strategies, but remain at a very early stage
• China PBOC skips the use of reverse repos and uses both MLF and Targeted MLF (TMLF) instead
• Trump and Congressional leaders reach a deal on debt ceiling that will increase spending in both non-defense and defense spending, deal will see debt limit extended for the remainder of Trump’s presidency (2-years), but be re-imposed in 2021
• BOJ Gov Lee warns that if Japan situation worsens will have to consider a response, active fiscal policy is needed, possibly will cut 2019 GDP outlook again
• South Korea keeping an eye on North Korea’s new submarine, which leader Kim was photographed inspecting

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened flat
• (AU) Australia RBA Assistant Gov Kent: A$ may be even higher if it werent for RBA rate cut; Australia is a long way away from unconventional policy – Q&A
• (NZ) Reserve Bank of New Zealand (RBNZ): Looking at unconventional policy strategies, unconventional policy work is at a “very early stage”
• (AU) Australia RBA Assistant Gov Kent comments on Committed Liquidity Facility: Many banks overseas faced significant liquidity problems having not paid enough attention to their liquidity management in the lead up to the crisis
• OZL.AU Reports Q2 production: Copper 28.5Kt, +5.1% y/y; Gold 27.1K oz, -3.7% y/y
• BLK.AU To sell package of tenements and other key assets for the Lake Way Project to Salt Lake Potash for A$10.0M cash
• (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: 116.3 v 115.9 prior
• (AU) Australia Foreign Exchange Committee Semi-Annual Turnover Report: Avg $119.1B/day in April

Japan

• Nikkei 225 opened flat
• 7238.JP Looking at various options for operations, considering closing 1 domestic plant and 2 in the US, cutting 3.8K jobs – Japan press
• (JP) Japan Fin Min Aso: Believe there is support for sales tax increase, election results showed more support than 3 years ago
• (JP) Japan Cabinet Sec Suga: Former Top FX Official Asakawa has asked to be special advisor to cabinet
• (JP) Japan Trade Min Seko: Japan to tell WTO its South Korean curbs don’t break the rules
• (JP) Japan MoF sells ¥399.6B v ¥400B indicated in 0.50% 40-year JGBs, highest accepted yield 0.425% v 0.535% prior, bid to cover: 3.02x v 3.87x prior
• (JP) Japan PM Abe: To take plenty of measures to handle the sales tax increase in Oct; biggest challenge is low birthrate and aging – Speaking after upper house elections saw his coalition retain control (yesterday)

Korea

• Kospi opened +0.1%
• (KR) Bank of Korea (BOK) Gov Lee: Could cut 2019 GDP outlook if trade dispute with Japan gets worse, will have to consider a response if conditions worsen – speaking to parliament
• 005490.KR Reports Q2 (KRW) Net 681B v 619Be; Op 1.1T v 1.1Te; Rev 16.3T v 16.3Te
• (KR) US President Trump: There was “very positive” correspondence with North Korea recently; will meet for nuclear talks when N. Korea is ready – Yonhap
• 000270.KR Reports Q2 (KRW) Net 505.4B v 331.9B y/y; Op 533.6B v 352.6B y/y; Rev 14.5T v 14.1T y/y
• (KR) South Korea issues rebuttal to Japan’s claim that South Korea has a lax system of control of goods that can be diverted for military purposes – Yonhap
• (KR) South Korean low budget airlines have reduced routes to Japan citing slow demand – Korean Press
• (KR) South Korea reports Russia military aircraft entered South Korea air space, fired warning shots at the plane – Korean press

China/Hong Kong

• Hang Seng opened +0.1%; Shanghai Composite opened flat
• (CN) US trade war negotiators said to likely to visit China next week for first face-to-face talk since G20 – financial press
• (CN) China Ministry of Industry and Information Technology (MIIT): An arduous effort will be needed to reach 2019 industrial target of 5.5-6.0%, due to H2 economic uncertainty – financial press
• (CN) CHINA PBOC CONDUCTS CNY297.7B V CNY267.4B PRIOR 1-YEAR TARGETED MEDIUM-TERM LENDING FACILITY (TMLF) AT 3.15% V 3.15% PRIOR (3RD USE OF TMLF); AND OFFERS CNY200B IN 1-YEAR MEDIUM TERM LENDING FACILITY (MLF) V CNY200B PRIOR AT 3.3% V 3.3% PRIOR; NET DRAINS CNY164.3B
• (CN) China PBOC sets yuan reference rate: 6.8818 v 6.875 prior
• (CN) China PBoC Open Market Operation (OMO): Skips v injects CNY50B in 7-day reverse repos prior; Net CNYB injected v CNY50B injected prior
• HUAWEI.CN Denies press reports: Do not have any business presence in North Korea
• (CN) China new Science and Technology Innovation Board, STAR, (similar to Nasdaq) falls on its second day of trade
• (CN) China CIRC orders 20 property insurers to cease using certain products correct mistakes; bans 11 insurers from new property products for 3-6 months
• (HK) Hong Kong Chief Exec Lam: Strongly condemns attacks in Yuen Long; protests around the China Liaison office a challenge to national sovereignty – press conference; govt to make attempt to arrest attackers

Other

• (SG) Analysts note that depending on upcoming June inflation data Singapore Central Bank (MAS) may easy policy ahead of semi-annual meeting in October
• (PH) Philippines Central Bank Chief Diokno: Further monetary easing depends on how strong growth is; BSP is prudent in calibrating monetary policy
• (SG) Singapore Jun CPI M/M: -0.2% v -0.1%e; Y/Y: 0.6% v 0.8%e

North America

• INTC Apple reportedly in late stage discussions to buy Intel smartphone modem chip assets for $1B – press
• (US) Pres Trump: Debt ceiling deal has been reached – tweet; Trump, Pelosi and other congressional leaders agree to raise spending on both defense and non-defense programs over the next 2-years

Europe

• (GR) New Greece conservative government won confidence vote related to economic policy – press
• SAN.ES Reports Q2 Net €1.39B v €1.3Be, Rev €12.4B v €12.0B y/y
• UBSG.CH Reports Q2 Net $1.39B v $1.38B y/y, Adj Pretax $1.79B v $1.82B y/y, Rev $7.53B v $7.64B y/y

Levels as of 01:20ET

• Hang Seng +0.1%; Shanghai Composite -0.0%; Kospi +0.4%; Nikkei225 +1.1%; ASX 200 +0.5%
• Equity Futures: S&P500 +0.1%; Nasdaq100 +0.0%, Dax +0.4%; FTSE100 +0.4%
• EUR 1.1190-1.1211; JPY 107.83-108.19; AUD 0.7018-0.7037; NZD 0.6729-0.6761
• Commodity Futures: Gold -0.7% at $1,417/oz; Crude Oil 0.0% at $56.21/brl; Copper +0.2% at $2.72/lb